Marshals won’t seize tanker’s oil unless it’s brought closer to shore

U.S. marshals won’t seize disputed crude from an oil tanker anchored 60 miles off Galveston’s coast unless smaller vessels bring it much closer to the coast, based on the latest instructions from a federal judge.

U.S. Magistrate Judge Nancy Johnson had ordered marshals to seize the oil, at the center of an ownership battle between Iraq and its semi-autonomous Kurdistan region, if it was removed from the giant tanker.

But after meeting with lawyers on Tuesday, she told the marshals to take no action on the load of Kurdish crude the Iraqi government considers stolen property.

The tanker United Kalavryta is anchored outside the court’s jurisdiction, and unless cargo is moved within jurisdictional limits, the marshals cannot seize the property, according to court correspondence sent to the U.S. Marshals Service late Tuesday.

The State Department Wednesday said if the cargo enters U.S. territorial waters, the legal process will kick in. Martime lawyers differed on exactly how far offshore the court’s jurisdiction extends, but it’s in a range of about 10 to 14 miles.

A company hired to transfer crude from the tanker to smaller vessels, a process called lightering, reiterated Wednesday that it has no plans to carry out its contract.

AET Inc. and its lightering company, AET Offshore Services, asked a judge to allow it not to carry out the contract signed with Talmay Trading to offload the crude. In a statement Wednesday, the company said, “While operations of this nature are private and commercially sensitive, AET can confirm that we will not be conducting any lightering operations in regards to the United Kalavryta.”

It’s not clear if Talmay is the final buyer or acting as a middleman for another purchaser.

The Kurdish Regional Government on Wednesday rebutted Iraq’s claims, arguing the crude has been “legally produced, shipped, exported and sold in accordance with the rights of the Kurdistan region as set forth in the Iraqi constitution,”according to a statement by Ashti Hawrami, KRG’s minister of natural resources.

In a letter sent to the federal court in Texas, the KRG’s lawyers argued the court has no jurisdiction over the dispute and that Iraq’s claims had no merit.

The brewing legal battle in U.S. courts probably will prevent the tanker from delivering its cargo in the U.S. and may discourage other countries from taking the oil.